Private Jets Flood the Market

By Robert Frank

The last time we looked at our Private Jet Index, jet sales were hitting some mild headwinds.

Now, the ride is getting rougher.

According to the newly released September numbers, prepared for us by Jay Duckson, president of Central Business Jets Inc., private jet owners are selling their planes in increasing numbers.

The chart, which I also call the GIV Index, since it tracks sales and prices for Gulfstream’s popular and long-standing GIV model, shows that the number of planes for sale has more than tripled. In July, there was an average of 36 planes for sale daily. That compares with the average of only eight to 10 for sale every day a year earlier. The July numbers are the highest in the GIV’s 22-year history.

“Last year at this time, it was tough to find GIVs for sale,” Mr. Duckson says. “Now there’s a ton of them.”

Jets also are sitting on the market longer: an average of 212 days, up from 168 a year ago.

The increases aren’t surprising, of course. Companies are cutting back on their private jets for cost-cutting, environmental and publicity reasons. Private fliers are paring back–flying less or even (gasp) going commercial no long hauls–because of the financial-markets mess and weakening economy.

What is surprising is that rise in jet inventory hasn’t been accompanied by a decline in prices. The GIV Price Index is holding relatively steady, with the average asking price for a GIV still hovering around $18 million or so after rising last fall from $17 million. (Sale prices are tougher to gauge since they aren’t public information).

The firm prices could mean demand remains strong, even as supply increases. Or it could mean GIV owners still have their heads in the clouds.

Mr. Duckson says he wouldn’t be surprised, given historical trends, if prices drop, perhaps as much as 30% over the coming months or years. “Demand is gone, supply is up and time-on-market is up,” he says. “That means we could have extreme pressure to reduce prices.”

Comments (5 of 17)

The Gulfstream four is priced at low end of the transcontinental range private jets.
Current economic conditions have presented a great opportunity to enter the market.
In regard to the previous comment in regard to fuel efficiency a new jet. A new jet with equal size cabin and range sells for at least three times the price. If you do the math you can never fly enough to make up for the cost of money.

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9:02 pm October 6, 2008

Drive A Jet wrote :

Used inventory is one measure. If you want a new one (any of them), look to take ownership in 2011 or so. So it isn't all bad news.

11:16 am October 6, 2008

Chris wrote :

This is one sweet plane for 149k! Might fit the budget a little better

About The Wealth Report

The Wealth Report is a daily blog focused on the culture and economy of the wealthy. It is written by Robert Frank, a senior writer for the Wall Street Journal and author of the newly released book “THE HIGH-BETA RICH.”